Microsoft CEO Steve Ballmer withdrew his company’s offer to purchase Yahoo yesterday, during a meeting with Yahoo CEO Jerry Yang.
I’ve said it before: Jerry Yang is in way over his head. Yang has not won a major victory here. If anything, Yang has given Microsoft time to create a better offer while he tries to craft and implement a strategy that ensures Yahoo’s continued independence.
It won’t be easy. As I’ve mentioned before, Yahoo’s best employees are leaving the company, and that trend is likely to continue. Neither Jerry Yang and his top aide, Yahoo presidentSue Decker, have ever run a large company before, as Steve Tobak and others have pointed out.
Yahoo needs a stable partner to ensure the company’s survival, if Yahoo management has indeed lost control of the company’s future. An alliance with Google would only make Yahoo seem less relevant. It’s much like an older sibling (Yahoo) who is surpassed by a younger sibling’s (Google)- but siblings usually aren’t traded on the stock market.
From Bloomberg:
Microsoft may come back with a new offer for Yahoo later, Heather Bellini, a UBS AG analyst, said before the decision. [Oracle], the third-biggest software maker, initially abandoned its bid for [BEA Systems]. after BEA asked for 24 percent more than Oracle’s $17-a-share bid. The companies agreed to the buyout three months later at $19.38 a share.
From the Associated Press:
“Clearly there’s frustration,” said Darren Chervitz, co-manager of the Jacob Internet Fund, which owns Yahoo stock. “I am not even sure if Yahoo cares about its shareholders because they didn’t show much regard for shareholders’ best interests in this process.”
Ballmer is also facing higher expectations. Many observers believed Yahoo would accept Microsoft’s bid. Instead, Yang is testing Ballmer’s patience, which is as deep as a puddle right now.
From the New York Times:
With a bid for Yahoo, Microsoft was trying to buy its way out of the problem. It was a controversial step and a gamble, but at least it was a big move. Now, there is no clear prospect of a quick fix for Microsoft, as the center of gravity in computing continues to move away from the personal computer, Microsoft’s stronghold, and to the Internet.
Microsoft remains a powerful company, and highly profitable, but its stock price has stagnated amid doubts about future growth. Years of antitrust scrutiny have tempered its competitive behavior in new markets.
Related posts on billso.com
- 30 April 2008: Microsoft-Yahoo deal possible in the next few days
- 18 April 2008: Antitrust regulators would fight a Yahoo-Google combination
- 5 April 2008: Microsoft’s offer for Yahoo may disappear
- 17 February 2008: Shareholders may bring Microsoft and Yahoo together
- 4 February 2008: Microsoft acquistion of Yahoo faces roadblocks
- 1 February 2008: Microsoft makes offer for Yahoo
- 25 January 2008: Oracle, BEA and middleware
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